Baker Market Update Special Edition

Information received since the Federal Open Market Committee met in October suggests that economic activity and employment have continued to expand at a moderate pace in recent months, apart from weather-related disruptions. Although the unemployment rate has declined somewhat since the summer, it remains elevated. Household spending has continued to advance, and the housing sector has shown further signs of improvement, but growth in business fixed investment has slowed. Inflation has been running somewhat below the Committee’s longer-run objective, apart from temporary variations that largely reflect fluctuations in energy prices. Longer-term inflation expectations have remained stable. Read more in the Baker Market Update.

Lone Star Capital Bank

(December 7, 2012)
-  In its twelfth year partnering
with the Salvation Army Angel Tree program, Lone Star Capital Bank employees
and customers came together to provide holiday gifts to 85 San Antonio area
children and seniors, exceeding their annual goal of 75.

This year, Lone Star
Capital Bank took a more holistic approach with its donations, hoping to make a
greater impact among the adopted Angels. Angels create wish lists that include
both clothing and a toy or special item and, if adopted, typically received one
item from his or her wish list. This Christmas the bank decided to focus on
fewer Angels (last year the bank provided gifts to 117 individuals), but to
donate every item on each adopted Angel's wish list.

"We're so proud and
honored to have such generous employees and customers here at Lone Star Capital
Bank," said Danny Buck, president and CEO. "We look forward to participating in
this program every Christmas and it has become sort of a ‘family tradition'
that I know we will continue for many years."

Angel Tree gives individuals and partnering corporations an opportunity
to adopt less fortunate children and seniors and provide them with personalized
gifts and necessities to those who would otherwise receive very little or
nothing during the holiday season.

Lone Star Capital Bank specializes in providing customized
banking services for entrepreneurs, executives, professionals, small
businesses, and real estate investors. It is a member of FDIC and an Equal
Housing Lender.

Silver Alert


NWS Austin/San
Antonio, Brownsville, Corpus Christi, Houston, San Angelo


LaSalle County Sheriff's Office is searching for Margarito
Gomez, diagnosed
with Dementia, W, M, 83 years old, DOB 06/10/29, HEIGHT 5' 06", WEIGHT 165 lbs,
Black/Gray Hair, Black Eyes.                                                                              

The senior
citizen was last seen at 08:00a.m., 12/11/2012 in Cotulla, TX, driving a Gold,
2006 Toyota SUV with TX License Plate 6DXVL.

enforcement officials believe this senior citizen's disappearance poses a
credible threat to HIS/HER own health and safety.

If you have
any information regarding this missing senior citizen, contact the LaSalle
County Sheriff's Office at 830-879-3041.

News Media
Point of Contact is
County Sheriff's Office at 830-879-3041.

Strengthening Your Debit Portfolio



By Judith McGuire*
Executive Vice President, Product Management

As the economy slowly emerges from the depths of the 2008 recession, consumers are incorporating lessons learned from several difficult years into behavioral choices going forward. For example, the recently published 2012 Debit Issuer Study, commissioned by PULSE, found that debit continued to grow in 2011, showing an increase in both the average number of transactions per card and in average debit spend per card over 2010.

And, earlier this year, Auriemma Consulting Group’s syndicated study of U.S. debit cardholders, The Payments Report, showed that consumers between the ages of 18 and 34 (millennials) strongly prefer debit. That same research reported that all consumer groups, in terms of age and income, are choosing debit more frequently than just a year ago. Debit is the preferred payment choice for many because it gives consumers better control over their finances.

How then can financial institutions capitalize on consumers’ preference for debit to grow revenue, improve customer satisfaction and reduce attrition?  Consider the many initiatives that financial institutions can take to increase debit transactions and dollar volume while simultaneously strengthening customer loyalty by helping customers meet their financial obligations:

Encourage Responsible Spending

  • Communicate through statement stuffers, online, email, text and app messages to reinforce the benefits of using debit to live within one’s budget and plan for unexpected expenses and larger purchases.
  • Promote the prudent use of debit in place of cash to better control impulse purchases and maintain transaction records in one easily accessible and secure location.
  • Advise customers on how they can avoid interest charges by paying with a debit card.

Reward Loyal Behavior with Relationship or Product Incentives

According to the findings in the Debit Issuer Study, 30 percent of regulated issuers have stopped their rewards programs. Given that rewards have historically been popular with consumers, we recommend thinking about rewards with an eye toward retention and in the context of the entire customer relationship.

  • Offer a premium debit product as a retention tool for frequent transactors or high dollar volume debit transaction customers and include customer incentives which drive business growth rather than “rewards” which take time to earn and energy to track.
    • Provide exclusive customer service contact via a special phone number and email address.
    • Offer ATM or account-fee waivers for a specific number of debit transactions within a specified time period.
    • Enable access to special considerations, such as lower overlimit fees, as a reward for a customer attaining an identified debit dollar threshold or direct deposit.
  • Nurture your millennial customer relationships, as these younger account holders are the most active debit users.
    • Conduct research to determine which services appeal to them in order of priority.
    • Help them manage their financial lives so that non-traditional financial services do not displace their debit relationship. For example, you can offer a pay day loan product for customers with a recurring direct deposit. This is popular among younger consumers who may need a short-term loan until their next pay day. When the direct deposit is credited, the loan is paid back automatically.
  • Explore merchant loyalty programs to increase debit transactions.
    • Identify and approach specific local or national merchants that have a congruous image and customer base, either for the majority or the institution’s most profitable debit customers, to develop a mutually beneficial compelling rewards/perks program.

Introduce Additional Ways for Debit to Generate Interchange Revenue

Encourage customers to use their debit cards and PIN online for Internet purchases and payments. Internet PIN debit provides a safe, secure way to enter PINs online with participating e-tailers. This added option appeals to consumers concerned about entering debit card information online.

PINless bill pay also provides increased convenience for debit cardholders and improved collections for companies.  Consumers can often receive credit for their bill payment much more quickly than ACH payments. This secure process is a win-win-win, considering the increase in debit interchange revenue.

Next Steps

How do you decide what to do first? Some steps to consider in deciding which of the above actions makes the most sense for your financial institution include:

  1. Conduct a feasibility analysis to understand which of these strategies and tactics might produce the most revenue or be easiest or quickest to implement without creating unanticipated consequences.
  2. Pilot test your initiatives with a limited segment of your customers to further refine and prepare for a flawless launch.
  3. Conduct market research to help size and prioritize opportunities. Market analysis should also be used to refine product designs.
  4. Create a competitive review of the products, services, fees and incentives that rivals are offering.

What’s to gain? Setting a revenue goal and targeting relationships and transactions following these analyses are sure to yield bottom-line, efficiency and retention benefits.

What’s to lose? Competitors looking at the same landscape also are likely determining which tactics are most desirable to capture the most profitable customer relationships.

*Judith McGuire serves as Executive Vice President of Product Management for PULSE, a Discover Financial Services company and operator of the PULSE® electronic funds transfer network, headquartered in Houston, Texas.

Regulatory Relief on the Way

Late last week,
the IBAT Board of Directors, in their final meeting of 2012, gave the IBAT
staff a thumbs up to proceed in drafting comprehensive federal regulatory
relief legislation.  IBAT President and CEO Chris Williston laid out the
components of a bill that is being vetted by IBAT's blue-ribbon community bank
task force for consideration.

think it is safe to say that the Board was enthusiastic about the prospects of
such legislation," said IBAT Chairman Troy Robinson of BankTexas in
Quitman. "Community bankers need a rallying cry and we are going to
give them one," he added.

one more telephone meeting of the task force scheduled Thursday, December 13,
the legislation will proceed to the drafting stage with hopes that it will be
introduced early in the 113th Congress.  

Jeb Hensarling

As reported
last week, several Texas lawmakers will assume important Chairmanships and
Leadership positions in the coming Congress. Congressman Jeb Hensarling will
play an especially key role for community banking as the Chairman of the House
Financial Services Committee.

Hensarling takes over the reins from Congressman Spencer Bachus (R - AL), who
is term-limited out of the Chairmanship.  Mr. Bachus has been a strong
supporter of community banking issues over the years, and we are appreciative
of his willingness to meet to discuss issues important to our sector of the

has been a champion of reducing government red tape and costs, and recognizes
the detrimental impact of the ever-increasing government intervention on our
economy and industry.  He has been an outspoken critic of the runaway
spending plaguing our federal government.  Additionally, he has been at
the apex of the efforts to address the issues with GSEs, particularly the
problems with Fannie and Freddie.  

Hensarling is an impact player in Washington, DC, and his new position will
provide further opportunities to shape the future of our industry," said
Chris Williston, President and CEO of IBAT.  "We have enjoyed an
excellent relationship with Jeb since prior to his election to Congress, and
very much look forward to working with him to aggressively address the
challenges facing community banking.  He is smart, articulate, thoughtful
and fearless, and we are most pleased to have him at the helm of this important

LegacyTexas Bank

2012 looks to
be another banner year for the mortgage team at LegacyTexas Bank. With 19 of
the region's most experienced and respected lenders on board, the local
community bank is serving a fast-growing number of homeowners during the
current surge in home sales across North Texas. Gerry Taylor, who leads
the Mortgage Division for the bank, says it's all about quality lenders and
service. "We have some of the best loan officers in the industry," he

This year,
LegacyTexas received awards for Best Mortgage Lender and was recognized once
again in D Magazine's Best Mortgage Professionals 2012 publication. While it's
people who are key to the bank's mortgage success, Taylor says they have also
put together one of the top loan platforms in the business. "Now is a
great time to buy, and it's also a great time to save money by refinancing,
even if you've done so within the past year. We have never seen rates this

From FHA to
conventional loans and purchases to refinancing, LegacyTexas Bank offers a full
range of mortgage options. 

Pearl Harbor Day

Please be aware that last night the
President issued an order for today lowering flags in remembrance of Pearl
Harbor Day (Dec. 7).  His order and the federal notice appears

Since no flag may higher than the US flag,
if the US flag is displayed at half-staff, all other flags, including the State
of Texas flag, should be flown at half-staff for the day.  

 All flags should return to full staff
on Saturday, Dec. 8, 2012.  

Texas Leadership in Congress

members of the Texas Congressional delegation will assume new leadership
positions in the next Congress.  

Hensarling has been named Chairman of the Financial Services Committee; Michael
McCaul will take the center chair at Homeland Security; Pete Sessions ascends
to the Chair in the Rules Committee; and Lamar Smith will take the helm at
Science, Space and Technology.

Senator John Cornyn was elected Minority Whip, the second ranking leadership
post in the Republican caucus.  Senator Ted Cruz was named Vice Chair of
the National Republican Senatorial Committee (NRSC), conferring significant
responsibilities in the campaign and fundraising areas to our newly elected

IBAT wishes
to convey sincere congratulations to all of these dedicated public servants,
and looks forward to working with them to address the challenges facing
community banking.

CFPB Remittance Rule

The Consumer
Financial Protection Bureau (CFPB) issued a bulletin on November 27, 2012 addressing a
forthcoming proposal to "refine" three elements of the final rule regarding foreign remittance transfers.
The bulletin outlines the following three topics to be addressed in the

  • How
    the rule will apply to situations in which the account holder provides an
    incorrect account number in a remittance transfer;
  • Guidance
    on how the provider of a remittance transfer service can disclose third
    party fees and other foreign taxes to senders; and
  • Clarification
    on the disclosure of regional and local taxes imposed by sub-national

The proposed
rulemaking is expected to include an extension of the effective date until 90
days after the issuance of the final rule on these three narrow issues.
 That would mean a new implementation date during the spring of 2013.

There is no
indication from the CFPB that this proposed rulemaking would change the safe
harbor threshold of 100 or fewer remittance transfers in the prior calendar
year, and 100 or fewer remittance transfers in the current calendar year for
determining if a provider is subject to the remittance rules.

TAG Program Update

In an
unexpected turn of events, Senate Majority Leader Harry Reid lent his support
to a continuation of the Transaction Account Guarantee (TAG) program by
introducing a bill to extend the expiration date.  Under Senator Reid's
stand-alone bill, the TAG program would be extended two additional years, or
until December 31, 2014. Both IBAT and the ICBA have pushed hard for an
extension of the program and will continue to work for passage of an extension.

In the
meantime, bankers should continue to prepare for the expiration of the program.
 The FDIC advises banks to provide "adequate advance notice" to
non-interest bearing transaction account (NIBTA) depositors of the expiration
of the program.  The term "adequate" is not defined but usually
means 30 days' advance notice when notifying a customer of an account change
not in favor of the depositor.  Unfortunately, that means banks should
provide the written notice to NIBTA depositors prior to any final resolution in

the credit union industry is putting a full court press on Congress to push
their longstanding quest to make even more small business loans. We obviously
believe this to be a terrible idea, and have notified Senators Hutchison and
Cornyn of our fervent opposition to the combination of TAG extension and the
credit union business lending bill.  IBAT has also voiced its opposition consistently over the years to the
Texas Congressional delegation.  

IBAT members
are encouraged to contact Senator Cornyn's office by phone (202-224-2934) or email to ask for his support on these issues.
 ICBA has also issued a call to action which includes optional talking
points for your phone call or email.  

Bank Directors' Conference

The Bank CEO
Network will host the 10th Annual Community Bank Directors' Conference March 25-26, 2013 at
the Omni Mandalay Hotel at Las Colinas in Irving, TX.

topics will include the most current and pertinent issues happening in our
industry. For details, please see the full agenda.  You and your guests are invited
to attend the Singer/Songwriter Pickin' Party on Monday night,
March 25th.

We encourage
you to take a few minutes and register for the event online. There is a high probability
that the 2013 event will sell out.

visit the Bank Directors' Conference website for any additional information.

Silver Alert





with Alzheimer's, WM, 74years old, DOB 02/02/1938, HEIGHT 5' 4", WEIGHT 130
BOXER AND "LUPITA" ON RIGHT HAND.                                                                                      

The senior
citizen was last seen at 5:00 AM, 12/03/2012 at 304 W 8TH STREET,

enforcement officials believe this senior citizen's disappearance poses a
credible threat to HIS/HER own health and safety.

If you have
any information regarding this missing senior citizen, contact the LOS FRESNOS

Media Point of Contact is
DEPARTMENT AT 956/233-4473.

Abound Resources Survey

Abound Resources is conducting a survey of CEOS, Finance, Operations, IT and Compliance executives designed to identify priorities for the coming year, gather views on key industry issues and then share that information with the industry.  

We invite you to take just 3 to 5 minutes to complete the survey, which will close Friday, December 7th.

To access the CEO Survey, please click here.

To access the Finance, Operations, IT and Compliance executives Survey, please click here.

All survey participants will receive a copy of a white paper created by Abound Resources outlining the results of the study and registration to the "Insights into 2013" webinar in January where Abound will present the highlights of the survey.

For more information please contact Gordon Moore at gmoore@ibat.org, or 512-275-2245.

Teaching Excellence Award

The deadline
to submit your nominations for IBAT's Teaching Excellence in Financial Literacy award
has been extended to December 31, 2012. 

Teachers play a significant role in how students learn these basics. IBAT wants
to recognize teachers' importance in conveying the basics of a financial
education in an effective and fun manner. There is a prize - $1,000 cash award
to three individuals who will be recognized by IBAT and local community bankers
during ceremonies at their respective schools. 

To be
considered for this award, each teacher must be nominated by an IBAT member in
good standing. Nominees must answer the questions on the teacher application form. Some IBAT members are
working with local principals on this process.

If you would
like to nominate a teacher in your community who has tackled the important
topic of Financial Literacy this past year, please submit your nomination form along with a letter of support for
your nominee.

Nomination Deadline is December
31, 2012!